Monthly Archive for December, 2005

Quote Of The Day

“We have been going from a rural or quasi-rural society to an aristocratic society. There’s no doubt that in recent years the upper end of the income scale has enjoyed a much larger increase in income and wealth than the lower end…The victims of our defective educational system are not the well-educated but the poorly educated”.– Nick Gillespie, in “The Father of Modern School Reform”, an interview with Milton Friedman marking the 50 year anniversary of his Voucher proposal

Unions In Context

Jonathan Wilde, writing in Catallarchy, puts unions in context:

There are lots of little guys, and lots of groups of little guys, and different unions represent different little guys, and most little guys don’t have any union to represent them. Some little guys are bigger than other little guys. Any special benefit that any particular union garners for one set of little guys comes at the detriment not just from businesses, but also from other little guys. Usually the other little guys, should they get uppity and try to compete with the big little guys, are labeled “scabs” and threatened with violence while the big fat cat little guys reap special privilege. Similarly, when a company manages to pass legislation that protects its own goods from competition, it comes at the burden of not just poor consumers who have to pay higher prices, but also at the expense of every other company large and small, that has to compete in an unfair marketplace. It ain’t about big guys vs little guys.

In democracies, classes don’t fight each other, organized groups do. Concentrated interests, regardless of “class”, have far more incentive to engage in political activism than do dispersed ones.

Exactly! Unions are not ‘for the little guy’: they are for the little guy at the expense of other, much smaller ‘little guys’.

For another example of how unions pit one group of poor against a much larger group of poor, read this on Wal-Mart.

Quote Of The Day

“The other reason the teachers unions will crumble is the teachers themselves. Against the odds, the unions have been able to persuade teachers that universal vouchers would hurt them. On the contrary, teachers would be among the main beneficiaries. We know that in government schools not much more than half of the money spent goes to the classroom. Almost half goes to administrators, bureaucrats, and the like. In private schools, a much larger fraction goes to the classroom. In addition, we know that working conditions are much more attractive in private schools. Despite lower average wages, the turnover rate [among teachers] is much lower in private schools than it is in government schools”.– Nick Gillespie, in “The Father of Modern School Reform”, an interview with Milton Friedman marking the 50 year anniversary of his Voucher proposal

Income Mobility In The United States

Income MobilityThe Wall Street Journal writes:

What the reports tell us is that the vast majority of Americans have not bumped into income glass-ceilings, but rather are experiencing an astonishing pace of upward income mobility. The Census data from 1967 to 2004 provides the percentage of families that fall within various income ranges, starting at $0 to $5,000, $5,000 to $10,000, and so on, up to over $100,000 (all numbers here are adjusted for inflation). These data show, for example, that in 1967 only one in 25 families earned an income of $100,000 or more in real income, whereas now, one in six do. The percentage of families that have an income of more than $75,000 a year has tripled from 9% to 27%.

But it’s not just the rich that are getting richer. Virtually every income group has been lifted by the tide of growth in recent decades. The percentage of families with real incomes between $5,000 and $50,000 has been falling as more families move into higher income categories — the figure has dropped by 19 percentage points since 1967. This huge move out of lower incomes and into middle- and higher-income categories shows that upward mobility is the rule, not the exception, in America today.

The article concludes with,

The Census family-finances data corroborate the common-sense notion that by far the best long-term anti-poverty program is growth and avoidance of recession — because the downturns invariably hit the poor hardest. That’s why President Bush’s tax cuts should be extended: They have created a positive investment, jobs and growth climate that will, if history is any guide, reverse the recent uptick in poverty levels.

We can say with certainty that most working Americans are achieving levels of wealth and income that far surpass those of their parents. It’s reassuring to know that the U.S. is still the pre-eminent meritocracy, where economic success is still predominantly powered by hard work and saving, not inheritance and privilege.

Here is the article in its entirety, economics professor Don Boudreaux has more.

Update: Economist Walter Williams has more.

Quote Of The Day

“The Democratic Party should be the natural supporter of vouchers. In Ted Kennedy’s words, the Democrats are supposed to be the “voice of the voiceless.” The voiceless would benefit the most from full-scale universal vouchers. You know, if you ask the voiceless, they are all in favor of vouchers. So I think, sooner or later, the nearly religious support for the anti-voucher position will crumble”. — Nick Gillespie, in “The Father of Modern School Reform”, an interview with Milton Friedman marking the 50 year anniversary of his Voucher proposal

The Power Of Public Sector Unions – New York And The MTA Strike

Jane Galt, deputy countries editor of Economist.com, writes about the MTA strike in New York:

The union, meanwhile, is running ads on local cable whining that they didn’t want to strike, they just had to because the MTA is so awful to them. This is not true. The union is very hard left, like transit unions in most places. I’m not sure why this should be; perhaps because most of the workers have to do very little to earn their pay. The train drivers don’t actually, y’know, drive; the rails take care of that. I’m told that they could easily be replaced with the kind of self-driving systems you see in airports, if the union weren’t so powerful. Admittedly, the conductors are highly skilled: it takes them years to learn to mumble into the announcement microphones in a secret language that no one in the entire world except them understands. But their main useful task appears to be sticking their heads outside the window to make sure no one’s limbs are sticking out of the train, a job that could be eliminated if idiots didn’t try to cram themselves through closing doors because they know the conductor will keep the train from driving off with their arm waving out the door. And the primary responsibility of the toll both workers is making sure that the line to buy Metrocards never gets shorter than ten feet. All of these jobs leave a great deal of time for contemplation, which the transit workers presumably spend eradicating every vestige of false consciousness.

The point being that the workers did indeed want a strike. They’ve been itching for it for years. That’s because they know they will win. In the private sector, the company would probably fire them and replace them with machines. But this is not the private sector, and the transit union controls not only a large number of votes, but a huge amount of funding. The City Council recently changed the law to allow political campaign contributions to come from individual locals, rather than the national union. That means that they can swing a huge chunk of change by getting locals from around the counry to donate to our council members. ….

But the union’s position is surprisingly unsympathetic, even to liberal New Yorkers. The workers make an average of $55K, more than what your average New York journalist makes. They have a lavish pension, on which they can retire at 55, and incredible benefits. And yet to judge from their interactions with ordinary New Yorkers, you would think that they were enslaved in Egypt. Everyone I know detects an expression of positive glee on the faces of the conductors who close the door just as you are getting to it, or the booth operator who makes you stand there, watching the trains come and go, while she stacks her pennies in orderly piles. No one I’ve talked to feels that they are entitled to more money, fewer disciplinary hearings, or better benefits. Everyone seems pretty eager to see the transit workers forced to wait until their sixties to retire like the rest of us. It’s not as if the bulk of the jobs are so physically demanding that it’s unreasonable to expect them to keep sitting in their booths for another ten years.

It won’t happen. The union will win, as unions always win in New York City. All this strike is doing is providing moderate excitement to stranded New Yorkers before the MTA caves. Sic semper tyrannis.

Her private sector remark is especially important. It is no coincidence that unions are almost all concentrated in the public sector as opposed to the private sector. The reason being that in the private sector, there are more checks and balances that make it difficult for a union to become overly powerful. The private sector, with its emphasis on competition and efficiency, greatly weakens the hands of both, unions and corporations, so they both have added pressure to cooperate with one another. For example, a corporation in the private sector has a strong incentive, provided the union gets overly demanding, to fight back for as long as possible and not give in, which in turn makes the union less likely to strike. In addition, in the circumstances where the union is overtly stubborn, the private employer has the added option of replacing the employees with machines, or ‘scabs’, or even hiring less people than before. In addition, the company has the added risk of going bankrupt if unions become overly demanding (which, btw, is the case in many industries), this also serves as a check on the unions demands.

But such checks and balances are not there in the public sector. For one, most of the public sector industries are monopolies, or close to monopolies, and so the union doesn’t have the fear that the public sector will disappear. It can keep demanding more and more, and the service ultimately still has to be provided. In addition, the public sector is controlled much more by political factors than by competitive factors, meaning that since unions control a vast number of votes, they can elect people that will be more sympathetic to their cause. Politicians are also fearful of doing anything that damages the unions, like replacing inefficient positions with machines, or reducing employees highly generous pay, all out of a fear that the unions will retaliate and cause the politicians their jobs. Also, since these politicians are only interested in the short term, and since keeping the unions satisfied increases their chances to get elected, there is something of an unstable system created where unions can keep demanding more and more, in an upward spiral that eventually can result in people making 60K a year and being able to retire at 55, while their work only involves being a train driver that doesn’t even have to drive. Last but certainly not least, the public sector unions have an added benefit of hiding their costs from the consumer. For example, when a union becomes overly demanding to a supermarket, the supermarket can sometimes pass on some of those added costs to the consumer, and so the consumer directly sees the harm unions are doing to them, but in the public sector, those added costs are rarely passed on to the consumer, since public assistance is there primarily for those that can’t afford to pay for the service themselves, so those added costs comes out of the taxpayer, people like you and I who is always wondering why taxes keep going up.

I am not saying that this is good or bad (well, okay, it is bad, but that is not my point here), my only point here is to point out these fundamental differences, and give people a more balanced view of public sector unions, and the power they yield, all at the expense of the rest of us.

For more commentary on the MTA strike go here.

Quote Of The Day

“As to the benefits of universal vouchers, empowering parents would generate a competitive education market, which would lead to a burst of innovation and improvement, as competition has done in so many other areas. There’s nothing that would do so much to avoid the danger of a two-tiered society, of a class-based society. And there’s nothing that would do so much to ensure a skilled and educated work force”.– Nick Gillespie, in “The Father of Modern School Reform”, an interview with Milton Friedman marking the 50 year anniversary of his Voucher proposal

Even Small School Choice Steps Have Significant Results

The Adam Smith Institute writes:

Those who make that claim should look at the experience of the US Charter schools. They are independently run, state funded schools often set up by groups of parents in deprived areas and they do not charge fees. The evidence shows that it is the poor and those from ethnic minorities who benefit most from school choice.

Caroline Hoxby, Professor of Economics at Harvard University, and Jonah Rockoff, of Columbia Business School, looked at charter schools in Chicago, where school places are allocated by lottery when a school is over-subscribed. The study compared the achievements of pupils selected by lottery with those who were not (and who, consequently, attended local state schools). All the pupils had motivated parents who wanted their children to attend charter schools – some were lucky enough to attend and others were not.

Maths results are reported as ‘percentile scores’, that is all test results are ranked from 1 to 100. Maths scores were over 6 percentile points higher and reading 5 points higher. When adjusted for gender, ethnicity, participation in the federal free or subsidized lunch programme, and the need for special education, maths results were 6.18 percentile points higher and reading 5.11 points higher.

A second study compared 4th grade (age 9-10) children in charter schools throughout the USA, some 50,000 pupils. Charter schools were compared with schools in the same neighbourhoods. Charter school pupils were found to be 5.2% more proficient in reading and 3.2% more in maths. Charter schools were especially likely to raise the achievement of pupils who were poor or Hispanic. In highly Hispanic areas the advantage was 7.6% in reading and 4.1% in maths, whereas in a typical charter school the advantage was 4.2% in reading and 2.1% in maths. In high poverty areas the advantage was 6.5% in reading, compared with 2.6% for other charter schools.

According to Dr David Green, Director of Civitas, “Egalitarians define middle class success as a public policy problem. But middle-class parents whose children are successful should be seen as ‘good parents’. We should glad that their children do well and focus public policy on the children who come from a disadvantaged background who are badly served by the existing state system. A pluralistic system that drives up standards by permitting energetic new entrants to shake up the existing schools will benefit them the most. Labour’s backbench rebels are acting against the interests of the poor.”

Quote Of The Day

“Fifty years after Friedman’s article appeared in the collection Economics and the Public Interest, proposals for education reform take many shapes: legally mandated performance assessments at the state and federal levels, means-tested vouchers, charter schools, homeschooling, and calls for universal vouchers or for the complete separation of school and state, to name just a few. Despite their many differences, what all proponents of radical and systemic change have in common is an emphasis on choice and competition as a means of increasing educational performance and parental and student satisfaction. As in so many other areas of economic and social thought, Milton Friedman’s ideas have carried the intellectual day”. — Nick Gillespie, in “The Father of Modern School Reform”, an interview with Milton Friedman marking the 50 year anniversary of his Voucher proposal

Announcing The “Nonpartisan Social Security Reform Plan”

Andrew Samwick, professor of economics at Dartmouth College, announces the creation of the “Nonpartisan Social Security Reform Plan”:

Along with Jeff Liebman of Harvard University and Maya MacGuineas of the New America Foundation, I am pleased to announce the “Nonpartisan Social Security Reform Plan.” Jeff was a Special Assistant to President Clinton’s National Economic Council, where he worked on Social Security, and Maya was a Social Security adviser to Senator McCain’s 2000 presidential campaign. Combined with my experience on the staff of the CEA in the Bush administration, we cover the political spectrum of recent years.

We’ve all spent plenty of time worrying about the looming fiscal crisis associated with the demographic shift toward an aging population, of which Social Security is the tip of the iceberg. Push finally came to shove, and we bound ourselves together via months of conference calls, and this is the plan that emerged. It’s not what any one of us would have come up with on our own, but those sorts of plans never become legislation anyway.

What is unique about the plan is that it is designed around the broad areas of likely compromise across the political landscape on how to restore solvency to the system. What makes the plan important is that the Office of the Chief Actuary has evaluated it and certified that it would “easily satisfy the criteria for attaining sustainable solvency.”

The plan contains four primary elements: a gradual reduction in future benefits; an increase in the payroll tax cap; an increase in the retirement age; and the establishment of personal retirement accounts. The plan puts great emphasis on fiscal responsibility – there are no transfers from general revenues to achieve sustainable solvency. Specifically:

1) Pay-as-you-go benefits would be gradually reduced to keep the costs of the traditional system to what can be afforded by the 12.4 percent payroll tax. The cuts are structured such that cuts are larger for high earners than for low earners.

2) The plan would establish mandatory personal retirement accounts (PRA) in the amount of 3 percent of taxable payroll. The accounts would be funded by a combination of diverting 1.5 percent of taxable payroll from the Social Security trust fund and requiring workers to contribute an additional 1.5 percent of payroll into their PRAs.

3) The funds diverted from the trust fund would be replaced, once the Social Security surplus was not adequate, by raising the cap on earnings subject to the Social Security payroll tax so that 90 percent of earnings were taxed. Workers would receive no incremental benefits for paying these additional taxes.

4) The plan would gradually increase the normal retirement age (currently scheduled to reach 67 in 2017) to 68 and the earliest age at which retirees could collect Social Security benefits from its current 62 to 65. People would be able to tap into their PRA assets beginning at age 62.

5) In order to minimize risks and administrative costs, accounts would be tightly regulated and full annuitization of account balances would be required.

6) Total replacement rates from the remaining traditional benefits and the new PRAs are comparable for most workers to those promised but currently underfunded in present law.

I invite your comments and questions on the plan, and I will be blogging more about the plan in the days and weeks to come. It was a fascinating experiment–we were trying to walk the very thin line between compromising our principles, which serves no one, and the principle of compromise, which is essential to moving public policy forward. It is a plan that respects political differences but not entrenched political interests. We believe that we have staked out the center of the political spectrum–the challenge now is to capture enough of the people just left and right of center to build the necessary coalition to see it through.

Some common objections and questions are answered here.

Quote Of The Day

“Among other things, Friedman prophesied that an education system based on vouchers would minimize inefficient government spending while giving low-income Americans, who are traditionally stuck in the very worst public schools, a better chance at receiving a good education. Vouchers “would bring a healthy increase in the variety of educational institutions available and in competition among them. Private initiative and enterprise would quicken the pace of progress in this area as it has in so many others. Government would serve its proper function of improving the operation of the invisible hand without substituting the dead hand of bureaucracy.”” — Nick Gillespie, in “The Father of Modern School Reform”, an interview with Milton Friedman marking the 50 year anniversary of his Voucher proposal

Media Bias Is Real, Finds UCLA Political Scientist

UCLA News reports:

While the editorial page of The Wall Street Journal is conservative, the newspaper’s news pages are liberal, even more liberal than The New York Times. The Drudge Report may have a right-wing reputation, but it leans left. Coverage by public television and radio is conservative compared to the rest of the mainstream media. Meanwhile, almost all major media outlets tilt to the left.

These are just a few of the surprising findings from a UCLA-led study, which is believed to be the first successful attempt at objectively quantifying bias in a range of media outlets and ranking them accordingly.

“I suspected that many media outlets would tilt to the left because surveys have shown that reporters tend to vote more Democrat than Republican,” said Tim Groseclose, a UCLA political scientist and the study’s lead author. “But I was surprised at just how pronounced the distinctions are.”

“Overall, the major media outlets are quite moderate compared to members of Congress, but even so, there is a quantifiable and significant bias in that nearly all of them lean to the left,” said co‑author Jeffrey Milyo, University of Missouri economist and public policy scholar.

The results appear in the latest issue of the Quarterly Journal of Economics, which will become available in mid-December….

The researchers took numerous steps to safeguard against bias — or the appearance of same — in the work, which took close to three years to complete. They went to great lengths to ensure that as many research assistants supported Democratic candidate Al Gore in the 2000 election as supported President George Bush. They also sought no outside funding, a rarity in scholarly research.

“No matter the results, we feared our findings would’ve been suspect if we’d received support from any group that could be perceived as right- or left-leaning, so we consciously decided to fund this project only with our own salaries and research funds that our own universities provided,” Groseclose said.

Read more.

Link via Urban Onramps

Picture Of The Day

Global Warming

Finally, conclusive proof that global warming exists!!!

Quote Of The Day

“[T]he world’s thirst for oil is outstripping the industry’s ability to produce it. That imbalance has driven up energy prices and can’t be fixed through conservation alone. Allowing ANWR drilling would show that the nation is finally getting serious about acting in its best interest by tapping a rich energy source and curbing its dependence on Middle Eastern dictatorships. Now that gasoline is again closer to $2 a gallon than $3, a sense of complacency is returning. That’s predictable but regrettable. Extracting more oil from Alaska in an environmentally sensitive fashion is important insurance against future energy shocks”. — — USA Today editorial

California Prison Inmates Security Tossed Aside By Social Engineering

A friend of mine notified me of California’s recent decision to “Curtail Racial Segregation” in the prison system. According to the Los Angeles Times article, here, “the state had little choice except to abandon the practice after losing a decision in the U.S. Supreme Court in February”. As I have written about in the past, California’s gangs are completely segregated along racial lines, and so the Supreme Courts decision to change this by forcing the prisons to be integrated is a dangerous ruling, both to the guards, and especially to the inmates. Don’t get me wrong, I like racial integration as much as the next guy, but the California prison system presents a very unique situation, and if you get things wrong, peoples lives could be lost, and because of that, I strongly believe that broader decisions of the proper way to implement this should be left up to those closest to the matter, California, and more so, California’s prison system itself.

I googled the Supreme Court case that brought this about as I was shocked to hear that the court was actually divided, 5-3, on this – what I see to be – common sense case. I thought to myself, who in their right mind could actually believe that forced racial integration in California’s prison system is a good thing, surely the very high risk that many people will die in pursuit of racial integration should outweigh any utopian views these justices may have. But I was mistaken, predictably, the Justices that voted for forced ‘racial integration in California prisons’ are the very social engineering justices themselves:

On February 23, the Opinion of the Court was delivered by Justice Sandra Day O’Connor. True to the spirit of recent decades of social engineering, O’Connor, along with Justices Kennedy, Souter, Ginsburg, Breyer and Stevens agreed that race should not be used as a factor in inmate housing assignments. Justice Thomas, joined by Justice Scalia, dissented–rather vigorously.

What is interesting about this case is that it was the Ninth Circuit Court of Appeals, the most liberal circuit court of appeals in the nation and the one that covers the state of California that ruled in favor of racial segregation in California’s prisons system yet the liberals on the Supreme Court overturned them. In other words, even the very liberal Ninth Circuit Court of Appeals couldn’t find it in their heart to risk the lives of inmates by demanding racial integration, yet the liberals on the Supreme Court certainly could. I bet it was the fact that the Ninth Circuit Court of Appeals covers California, and so they have much more experience with California’s prison system, while the Supreme Court justices, sitting on the other side of the country, ignored all of that and ruled against them anyway.

Contrary to what these justices may have learned in academia, behind walls shielding them from reality, racial integration in California’s prison system is VERY DANGEROUS, and could put so many people’s lives in jeopardy. California gangs are not like the disciples of New York, they are not like the Latin Kings of Chicago, California’s gang are extremely racial, the most of any state.

Also, contrary to what these justices were taught at Harvard, racial integration does not always work. There are prerequisites involved, and a gang life and surrounding culture that indoctrinate you from day one that your gang and its association to your race is primary, is certainly not a healthy prerequisite. If this social experiment goes wrong, it does not result in just some kids getting kicked out of Princeton University and having their father take the Mercedes away, it is people’s lives that will be in jeopardy. Something that these justices will never go through, sitting in their high chairs acting as if they personally stood courageously for racial integration, all the while prison inmates could be risking beatings, rape and in many cases, murder.

This google result captures my point well:

Justice Stevens, in a peculiar “Dissent,” after sermonizing on the evils of segregation, wrote that the Court’s Opinion did not go far enough, since it should declare California’s policy unconstitutional and should strike it down. He spoke of the need for “racial alliances,” and offered a Pollyanna discourse on how “integrated cells encourage inmates to gain valuable cross-racial experiences.”

One can envision these Supreme Social Engineers patting each other on their backs, as they outdo one another in enunciating their refusal to compromise on the sacred principle of integration. Meanwhile, back in the ugly reality of prison life, are the men who face the potential of greater brutality and unnecessary torment beyond that imposed by the loss of their freedom.

My favorite Supreme Court justice Clarence Thomas yet again shows himself to be the true defender of minorities and the defenseless when he wrote in his dissent:

There is good reason for such deference in this case. California oversees roughly 160,000 inmates, in prisons that have been a breeding ground for some of the most violent prison gangs in America–all of them organized along racial lines. . . .

The majority is concerned with sparing inmates the indignity and stigma of racial discrimination. California is concerned with their safety and saving their lives.

Thomas goes on to say,

The majority decides this case without addressing the problems that racial violence poses for wardens, guards, and inmates throughout the federal and state prison systems. But that is the core of California’s justification for its policy: It maintains that, if it does not racially separate new cellmates thrown together in close confines during their initial admission or transfer, violence will erupt.

The dangers California seeks to prevent are real. See Brief for National Association of Black Law Enforcement Officers, Inc. as Amicus Curiae 12. Controlling prison gangs is the central challenge facing correctional officers and administrators. . . .

There are at least five major gangs in this country–the Aryan Brotherhood, the Black Guerrilla Family, the Mexican Mafia, La Nuestra Familia, and the Texas Syndicate–all of which originated in California’s prisons. Unsurprisingly, then, California has the largest number of gang-related inmates of any correctional system in the country, including the Federal Government.

On the other hand, there is hope, the Los Angeles Times article also states:

Under the new policy, race may still be used as a factor in separating prisoners — a white supremacist, for example, would probably not be housed with a black inmate — but it will no longer be the primary criterion, state prison officials said.

Instead, prisoners’ gang affiliations and individual histories will be scrutinized to determine how best to place them to minimize fighting, they said.

This seems like code word that the Prisons will comply – much like universities did after the Supreme Court struck down affirmative action quotas – in such a fashion that it results in almost the same way as before. If they do this, and maybe just move a few benign prisoners here and there, in compliance with the Supreme Court ruling, than many prisoners lives will certainly be saved.

Of course this is all meaningless to the social engineers on the court, they after all, are the champions of minorities, and if many people have to die to fit their view of reality, so be it, there heads will continue to stand tall.

Quote Of The Day

“Economic ignorance, misconceptions and superstition drive us toward totalitarianism because they make us more willing to hand over greater control of our lives to politicians. That results in a diminution of our liberties. Think back to the gasoline price controls during the 1970s. The price controls caused shortages. To deal with the shortages, restrictions were imposed on purchases. Then national highway speed limits were enacted. Then there were more calls for smaller and less crashworthy cars. With the recent gasoline supply shocks, we didn’t experience the shortages, long lines and closed gas stations seen during the 1970s. Why? Prices were allowed to perform their allocative function — get people to use less gas and get suppliers to supply more.

Economic ignorance is to politicians what idle hands are to the devil. Both provide the workshop for the creation of evil”. — Walter Williams, Professor of economics at George Mason University